ERV was recently musing on the fate of trainees following the death of a lab head (Principal Investigator; PI). As part of this she wondered about the fate of the grant funding:

Who would take over his research? You cant win a grant and say "Wait, I dont want it. Im gonna give it to Steve down the hall", and you cant just say "Well, Jims dead. Might as well give the money to Susan."

Actually, you can.
This little misconception of ERV's is relatively common because we talk about NIH grants as if the PI in charge owns it in some way. S/he does not, technically. It is important for transitioning scientists to understand this because this is a fairly frequent (if unheralded) mechanism for making the transition to independence.

This simple fact has a number of implications including the fact that taking a grant with you when you change institutions is basically a respected tradition, not a formal right. More Orac:

It's a custom more than anything else that institutions relinquish grants when a PI leaves to take another job, thus allowing the PI to take the grant with him or her; institutions don't have to do that, but they know that if they didn't they'd never get any decent funded investigators to work for them. The bottom line: If a PI can no longer continue to be PI on a grant, the institution can either assign it to another PI or, if no person with the necessary expertise exists at the institution, the institution has to relinquish the remaining funds to the NIH.

Although we often discuss grants as if awarded to PIs, this is not technically accurate. NIH grants are submitted by local Institutions (University, Research Institute) on behalf of a given Investigator. NIH grants are awarded to local Institutions, not PIs. There is one critical consideration for this discussion which is that the local Institutions decides who can submit a grant. The NIH is not the gatekeeper in this respect, nor are study sections.

In that post, I was emphasizing the fact that one's job title was immaterial to the ability to submit grants because the local Institution decides who can be a PI. I then followed this post up with a little more expansive description of some of the ways in which scientists can transition from postdoctoral trainee to PI of an NIH award. At the end I noted:

Remember that the institution holds the grant, not the PI? This means they decide who the PI is. Now, let's admit that the NIH IC is going to take a strong interest in this and they can refuse to award the grant in the first place or refuse to continue a noncompeting interval. But PI substitution does happen, particularly when someone dies (morbid, yes, but it happens people) or leaves academic science and agrees totally with the swap. It can happen at the competing continuation stage, probably this is one of the most frequent PI swaps. Strategically, the best way is to do the swap formally in an existing year of funding so that the newly transitioning investigator can claim to have been running the show for a year or more. It also presents a fait accompli to the IC. This happens more frequently than you think. A little judicious CRISP searching can tell you some interesting things about who, even of the luminary variety, got launched by taking over a grant or two from an even more senior luminary.

So the point that Orac missed is that if there is no existing PI at the institution with the requisite expertise to take over a grant, the institution can create one! Either by a full-on new hire or by promoting a promising senior postdoc type. This why my advice to postdocs is to strive to make the most of your current situation and to make sure that if opportunity comes a'knockin' you are the one that every one (the Chair, other senior faculty) select to promote.

You might as well also be doing what you can on the home front. You never know when someone might die (I'm not kidding. Freak accidents took big names in neuroscience (Goldman-Rakic) and aging (Thal) in very recent memory. Random illnesses have taken some in the less well known field of drug abuse (Fischman, Segal)) or leave science and open up an opportunity for the best-prepared trainee around...

This hits too close to home, we recently lost a fine investigator in my field unexpectedly at the age of 52. There was also a case like this, where a member of my graduate department passed away very unexpectedly... so as you say- these things do happen.
Grants get transitioned to a new PI every so often for other reasons as well. Sometimes senior faculty want to ease out, cut back on time,... and gently hand off the lab to a trusted senior member of the lab...

Grants get transitioned to a new PI every so often for other reasons as well.
Indeed. Retirement, cutting back, sure. Taking off to industry or NIH program jobs. Having too much grant success themselves (there are occasionally effort requirements) and being loathe to relinquish an older project entirely. and sometimes intentional mentoring strategy.
also, I'm still seeing this trend I mentioned a bit ago in which people without a great deal of apparent independence are submitting grants. grants that look suspiciously like the BigCheez's usual stuff. perhaps motivated by fears of caps on the number of grants awarded to a single PI.